Highline Class, BI 348Basic Business Analytics using Excel, Chapter 01Intro to Business Analytics

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Topics• Raw Data Into Useful Information• Business Analytics (Textbook):• Descriptive Analytics• Predictive Analytics• Prescriptive Statistics• Big Data• Steps In Making A Decision• Types Of Decisions• Approaches To Decision Making

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Raw Data Into Useful Information• Data Analysis (From Busn 216 and Busn 218):• Converting raw data into useful information for decision

makers• Statistical Analysis (Busn 210):• Statistics is the art and science of collecting, analyzing,

presenting and interpreting data to help make informed decisions.

• Analysis (Merriam-Webster dictionary):• A careful study of something to learn about its parts, what

they do and how they relate to each other• An explanation of the nature and meaning of something

• Analytics (Merriam -Webster dictionary):• Information resulting from systematic analysis of data or

statistics

• Business Analytics (textbook):• Scientific process of transforming data into insight for better decisions

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Business Analytics (Textbook):• Scientific process of transforming data into

insight for better decisions• Data driven decision making• Fact-based decision making• Scientific process such as: Queries, Linear

Regression, and Optimization

• Business Analytics has three parts:• Descriptive Analytics

• Describing the past

• Predictive Analytics• Build models that help predict the unknown future

• Prescriptive Analytics• Build models to help predict the best course of

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Descriptive Analytics• Set of techniques that describe what has happened in

the past.• Examples:• Data Queries

• Like a Filter in Excel or an Access Query

• Reports• Like an Income Statement, a Regional Report or a PivotTable

with multiple Criteria

• Descriptive Statistics• Examples: Mean, Median Mode, Standard Deviation, Correlation

• Data Visualization• Examples; Charts, Tables, Conditional Formatting

• What if Excel models• Like Income Statement Budget with Assumption Table or a

Fixed Variable Cost Analysis

• Data Dashboards• Collection of items such as tables, charts and descriptive

statistics that will update as new data arrives

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Predictive Analytics• Set of techniques that use models

constructed from past data to:• Predict the future

orAscertain impact of one variable on another

• Examples:• Linear Regression

• Models to help predict one variable based on a one or more other variables)

• Time Series Analysis & Forecasting• Using data to make forecasts of unknown future

• Data Mining (not covered in this class)• Methods to reveal patterns and relationships in

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Prescriptive Analytics• Set of techniques to indicate the best course

of action; what decision to make to optimize outcome.

• Examples:• Optimization models

• A mathematical model that gives the best decision, subject to the situations constraints

• We’ll use the Excel feature called “Solver” which can tell us things like what number of units to produce to maximize profit.

• Simulation• Use Native Excel Functions to create a simulation

• Decision Analysis (not covered in this class)

• Advanced Analytics• Predictive Analytics and Prescriptive Analytics

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Big Data• A set of data that cannot be managed, processed or analyzed

with commonly available software in a reasonable amount of time.

• Why do we have so much data now:• Every time you buy something, the scanner beep at the register

records a lot of data such as price, product name, time, date, location, sales person and more.

• All our personal devices collect vast amounts of data everyday• Social media• E-commerce data• Almost every click on the internet…

• According to Google: Amount of data generated every 48 hours is equal to all data created from the beginning of civilization to 2003.

• Business Analytical methods are used more often now because of:• Vast amount of data• Improved computational approaches and algorithms to handle the

vast amounts of data• Faster computers and more ability to store vast amounts of data

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Steps In Making A Decision:• Identify and define the problem• Determine criteria that will be used to

evaluate alternative solutions• Determine the set of alternative solutions• Evaluate the alternatives with the criteria• Choose the alternative

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Types Of Decisions:• Strategic Decisions• High-level manager decisions concerning the overall

direction, goals and objectives of the organization (3 - 5 year time span)

• Examples:• Does a local company try and sell out of the state or

internationally?• Does an online only company try to open brick and mortar

stores?

• Tactical Decisions• Mid-level manager decisions about how organization can

achieve the goals and objectives of the organization (1 year or 6 month time span)

• Examples:• What states or cities or locations to sell in?

• Operational• Decisions concerning day to day operations such as number

of products to make or order, or how to schedule events.

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Approaches To Decision Making:• Tradition• (Probably based on someone’s past

experience from way back)

• Intuition• (Probably based on persons unconscious past

experiences)

• Rule of Thumb• (Probably based on past experiences)

• Data Based Decisions• (Based on past experiences, but in a more

objective way)

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